Monday, February 4, 2013

Singtel

Singtel: Post Bharti's results on Friday, CLSA issued a note maintaining a SELL rating on Singtel, downgrading Bharti Airtel after NPAT was down 45% y/y. CLSA has a decreased its TP for Singtel to $3.01 (from $3.50). Bharti will contribute ~15% of SingTel’s associate income (down from ~33% in 2008). This is a steep absolute and relative decline which is compounded by strong contributions by Telkomsel (~53%), AIS (~18%) and Globe (~10%). In the India market- while competition is easing and promotional offers are reducing, sustained tariff hikes are not on the cards. CLSA is bearish the counter as it seems that the recent 20% move in share price was due to the prevailing logic that Bharti must be turning around. Singtel is cheapest in terms of valuation, with the counter currently trading at 14x P/E, vs peers M1 at 17.4x and Starhub at 8.5x.

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